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Residential Rental Income Tax

WHAT YOU NEED TO KNOW

The Law

A new specified tax source was introduced in Kenya from January 2016, the specified source is known as residential rental income tax.

What is Taxable?

All rent, premium or any other consideration for use or occupation of property.Rates of Taxation.Taxation rates are dependent on whether the taxable person is an individual or corporate entity and whether they are resident or non resident.


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Finance Act 2016

Sponsoring Sports

For the purpose of ascertaining the total income of a person for a year of income there shall be deducted all expenditure incurred in that year of income which is expenditure wholly and exclusively incurred by him in the production of that income. Not all expenditure incurred by a person is used for business such as donations and personal expenditure. The Income Tax Act is now amended and allows expenditure in relation to expenditure incurred in that year of income by a person sponsoring sports, with the prior approval of the Cabinet Secretary responsible for sports.

New tax Bands effective January 2016

Rate in each

Individual rates of Tax

shilling

 

 

 

On the first Shs.134,164

 

10%

On the next Shs.126,403

 

15%

On the next Shs.126,403

 

20%

On the next Shs.126,403

 

25%

On all income over Shs.513,373

 

30%

 

 

 

Figure 1

 

 



 

Whats the difference between tax on rental income and residential rental income tax?

Rental income tax is chargeable to persons whose income for use or occupation of property exceeds sh ten million shillings in a year of income or persons with notification to the commission elects not to be subjected to residential rental income.

However, permission has to be sought before a person can file returns on under rental income rather than residential rental income tax.

 


 


 

What are these zones and why is it important to you.

 

 


 


 

Among the proposed changes to the Income Tax Act is the change of individual graduated rates used to determine tax payable by individuals. Another amendment is the change in personal relief granted to individuals before deduction is made.

Have you complied to the provisions of  finance act 2016?

 


 

 

Important Accounting Dates in taxation calendar in Kenya


  • Pay As You Earn Remittances: 9th of every month.
  • VAT Remittances, Excise Duty, Withholding Tax, Aviation Fees, Standards levy: 20th of every month
  • Withholding VAT: Every Monday
  • Turnover Tax (T.O.T) 20th day of the month following the end of every quarter
  • Installment Tax: 20th day of every,4th, 6th, 9th and 12th of every month
  • Air Passenger Service Charge: 25th of every month
  • Balance of Tax on Self Assessment: Last day of the 4th month following the end of year income or accounting period

 


get in touch with us: + 254 735 679 308 | 020 2400 366 | This e-mail address is being protected from spambots. You need JavaScript enabled to view it | www.laxiaafrica.com